An irregular income can make it difficult to plan and succeed financially. When you are not sure how much money you will have from month to month, it can be difficult to plan out a budget or to make a successful financial plan. It is possible to
budget an irregular income with careful planning. This article will talk more about the tips and tricks you can begin to do now so that you have a steady amount to budget each month, while still making good use of your income.
1. Work a Month Out
One of the best things you can do is to save up enough money, so that you are living on the previous month’s money. This allows you to know exactly how much money you will have to spend for the next month. If you are working a job where you are paid on commission each week, or if you are working for tips it can be easy to dip into those funds to cover your bills right now. If you set aside extra each week until you reach the amount of your very basic budget needs, this will help you to normalize your budget and make it easier to pay your bills each month. It will help reduce your stress, which can increase your sales, because you are no longer desperate to make the sale. Once you have done this, you can contribute the money into a savings account each week, until you have enough saved up to pay yourself the next month. The extra money you earn after that can go to other expenses. If you are married or receive a guaranteed base pay, try to set your budget up mainly on that, and use your extra money towards your financial goals.2. Save for Lean Months
In addition to saving up so you can live on last month’s wages, you need to save up for the lean months. This means you should have an account or money marked to cover the months where you do not make enough to get by one. Every month you earn enough to cover the next month’s expenses, you should be putting money into a savings account to cover a month where your sales drop or to cover yourself if you cannot work as much as you normally do. If your salary is completely commission based, you may want more than one month’s income in the fund, and if you have a base pay, you may want to save the difference between your base pay and your basic budget for a few months. This is different from a traditional
emergency fund.
3. Creating a Financial Plan
After you have your basic budget in place that covers your necessities, you need to come up with a plan that lets you prioritize how the rest of your money will be spent. There will be some months when you have an incredible commission and you need to make sure you are using that money to build your financial future, and not just blowing it all on fun items. Although you should set aside some of it to reward yourself for your hard work. Create a list of long-term goals, and then prioritize them from the most important to the least important. You may decide to give a percentage of any income over you basic needs to each of these goals, or you may focus most of your money on your top two or three items on the list until they are taken care of.4. Don’t Forget About Retirement
You should continue to contribute to retirement each month. Most employers still offer a 401(k) plan to commission based employees, but if you are self-employed or working part-time as a waitress, you will need to contribute to your retirement each month. Neglecting this can hurt you in the future. Retirement contributions should be a part of your monthly budget. Similarly you should make sure you have your other benefits such as
health insurance in place each month as part of your base budget.
